July 7, 2015

It is in no one’s interest, including the United States, to let Greece collapse. Greece’s creditors might lose most -if not all- of what they’re owed and the Greek people would suffer immensely for an indefinite period of time. The potential social, political, economic and even military implications from that are too profound to analyze in depth in this short article. Suffice it to say however, that the presently acrimonious animosity between the parties evidently makes it all but impossible for them to come up with a constructive alternative.

Greece’s economy, currently shrinking, is too small relative to its debt. It needs a growth rate comparable to China’s and close to full employment to meet its obligations. In other words, it needs massive additional investment to create a new income stream with which to simultaneously service all the debt -old and new- and create well-paying jobs, not onerous conditions which will have the opposite effect.

Here’s an idea that might solve the problem to everyone’s satisfaction. Greece has two untapped assets -abundant sunlight and seawater- that could be exploited to transform the country into a major energy producer. Its many islands in the Aegean, some of which are uninhabited or sparsely populated, could be filled with dedicated solar-powered electric generators to produce hydrogen by electrolysis. The income from the sale of the hydrogen and other related byproducts (including fertilizers) would be mortgaged for a specified period of time to amortize the cost of the new investment plus existing debt, much of it to German taxpayers.

It would be a win-win scenario. It would give Greece time to implement whatever internal reforms it deems appropriate, give it a much needed economic boost, and reinstate its credit. The European Union would get a new source of clean energy from within NATO territory, reduce its reliance on fossil fuels along with its related carbon footprint, and prevent the inevitable losses that would follow a Greek collapse.